China Ed Intl Inc (GREY:CEII)

On August 19, 2012, China Education International, Inc.’s (“we”, “us”, or “ours”) subsidiaries, China Education Schools, Ltd. (“China Education”) and Hangzhou Kunjiang Education and Technology Co., Ltd. (“Hangzhou Technology”) entered into a series of agreements with Shanghai Fuyi Education Information Consulting Co., Ltd., a Chinese company “Shanghai Fuyi”), located at 335 Guoding Road, Building 2-1501, Yang Pu District, Shanghai, China, and its shareholders which permit us to operate Shanghai Fuyi and the right to purchase all of its equity interests from its shareholders as summarized below (the “Shanghai Fuyi Agreements”).

On December 30, 2011, China Education International, Inc.’s (“we”, “us”, or “ours”) subsidiaries, China Education Schools, Ltd. (“China Education”) and Hangzhou Kunjiang Education and Technology Co., Ltd. (“Hangzhou Technology”) entered into a series of agreements with Peng Tuo Information Technology Co. Ltd., a private education company organized and duly authorized in China, located at Number 467, West Wenshan Road, Suite 117, Hangzhou, Zhejiang Province, China (“PTIT”), and its shareholders, which permit us to operate PTIT and the right to purchase all of its equity interests from its shareholders.

On December 16, 2011, China Education International, Inc. held a conference call.

On October 14, 2011, the Company agreed to an Agreement of Assignment with Frontera Associates, Inc. (“Frontera”) pursuant to which Frontera assigned that certain License Agreement dated September 1, 2010 between Frontera and American Education Center, Inc. Under the terms of the License Agreement the Company will have the use of the name American Education Center, its systems, brochures, literature, manuals, know how, logos, contacts and arrangements with schools and colleges across the U. S., China and elsewhere. The license term is for thirty (30) years and may be terminated by American Education Center only in the event of failure by Frontera (or any assignee) who fails to comply with the terms of the agreement, including a license fee of 2% of net revenues associated with the licensed property, or in the event of insolvency or bankruptcy of Frontera or any assignee.

In consideration for the assignment, the Company will issue to Frontera 1,000,000 shares of its common stock and a three-year warrant exercisable at $1.00 per share for 2,400,000 shares. The warrant includes a cashless exercise provision and standard anti-dilution provisions.

We reported a net loss for the third quarter of 2011of $0.5 million, due primarily to the operations of Shaoxing High School and Lanhua School, and the general and administrative expenses for professional fees and other expenses associated with our U.S. based corporate office and Hangzhou Technology.

Non-gaap EPS for the second quarter 2011 was about $0.05.

Revenues for the second quarter of 2011 were $1.5 million and were derived from tuition, school selection fees and dormitory fees. Cost of sales for the second quarter of 2011 was $0.9 million, resulting in a gross profit margin of 42.0%. Total operating expenses in the second quarter of 2011 were $0.4 million, and were primarily comprised of general and administrative expenses associated with our Shaoxing High School and Lanhua School subsidiaries, including administrative staff compensation, utility expenses and routine office expenses. We reported net income for the second quarter of $0.3 million, which was primarily a function of the operating results of Shaoxing High School, which generated $0.4 million of net income, partially offset by professional fees and other expenses associated with our U.S. based corporate office and Hangahou Technology. Under the terms of our Exclusive Cooperation Agreement with Shaoxing High School, we are entitled to 90% of their net income. As a result, the net income attributable to China Education International, Inc. stockholders was $0.2 million.

We expect that our cash on hand and cash flow from operations will be sufficient to sustain our operations for at least the next twelve months. However, the following trends are reasonably likely to require us to raise additional capital.

• An increase in working capital requirements to finance the growth of Shaoxing High School.
• Acquisitions of additional schools, with related increases to capital expenditures, marketing and administrative expenses to support the growth of our company.
• The costs for recruitment and retention of additional management and personnel to support our operations and expansion plans; and.
• The additional costs, including legal accounting and consulting fees, of being a public company and the related compliance activities.

On December 31, 2010 China Education became a public entity via a reverse merger transaction.

Company Snapshot:

A private primary education school for grades 7 through 12

Industry Snapshot:

• Background on Private Education in China. The Chinese central government began to allow domestic private investment in education in the late 1970s as a way to aid areas where public educational resources were inadequate. In 1986, China passed the Compulsory Education Law, which mandated nine years of compulsory education (grades 1 through 9) and required that provincial and local governments take the necessary steps, including encouraging private sectors to invest in education and to ensure that all school-age children receive at least the required nine years of education. In 1997, the China State Council, which oversees the Ministry of Education, released the Rules for Social Force-Run Schools that encouraged the development of private education in China. In December 2002, the China Standing Committee of the National People's Congress passed the Non-State Education Promotion Law which permitted private Chinese individuals to earn reasonable profits from their investments in private education practices.
  
• According to the Chinese Non-Government Education Reform and Development Survey Report issued by the Chinese Association for Non-Government Education in 2009, the private sector currently accounts for approximately 10% to 20% of student enrollment in the private education market across the levels of education from kindergarten to higher education and continuous training. Over the past three decades, the geographical coverage of the private sector has extended from its beginnings in Beijing, Shanghai, Guangdong, Zhejiang, and Henan to 34 provincial administrative regions nationwide.
  
• Provincial and local governments in Zhejiang and Anhui provinces have explicitly encouraged the growth of private education and implemented favorable and flexible promotional policies in their regions. The measures include tax refunds, permission for vocational schools to independently determine tuition rates, grant of eligibility for favorable rates on land use rights, and promotional policies in the recruitment and compensation packages for the teachers of private schools, students admission, and bank credits. We believe that the market demand and government support have created a solid foundation for the private sector to prosper in the private education market. According to the Survey Report, Zhejiang Province private high school enrollment is 22% of overall high school enrollment compared to the Chinese national average of 10%. In Wuhu city of Anhui Province, the number of private kindergartens was about 90% of the total number of kindergartens in the city in 2007.
  
• In June 2010, the Chinese government released the National Outline for Medium and Long-term Education Reform and Development (2010-2020). The 2010 National Outline recognizes the private sector as one important growth point in the Chinese education system in the coming decade and encourages the investment by private shareholders or jointly with public institutions to develop educational programs. The 2010 National Outline emphasizes that schools, students, and teachers in the private sector have equal legal status with the counterparts in the public sector and urges local governments to correct the disparity in their policies with private schools. In addition, the 2010 National Outline requests the public funding to support private educational programs and award outstanding organizations and personnel. The Chair of the Chinese Association for Non-Government Education Mr. Xiping Tao commented that the 2010 National Outline has created huge opportunities for private education by clearly defining its legitimate role in Chinese education system and providing favorable guiding policies for this sector.

Post Merger Share Calculation:

• 1,265,456: Pre reverse merger outstanding shares 
• Under Review: Newly issued shares of Common Stock
• 4,740,694: Issued to investor relation firm

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: TBA

Financial Snapshot: December Year End

2009 vs. 2008

• Revenues: $3.3 million vs $2.9 million 
• Net Income: $800,000 vs. $400,000

Nine Months 2010 vs 2009

• Revenues: $3.3 million vs. $2.9 million 
• Net Income: $700,000 vs. $600,000 

Pro Forma Valuation: using current price and new share count

• Trailing EPS (ADS): TBA
• Trailing P/E: TBA

On December 21, 2010, the Board of Directors of our company made decision: to purchase 1,265,456 shares of common stock of China Bull Management Inc on par value $0.0001 per share for aggregate price of $126.55.

The share offering of China Bull Management Inc to USChina Channel is relative to the two companies’ close relations of the sole control interests of Andrew Chien, not involving any public stock offering such as public solicits including advertisement, and was exempted from the registration requirement due to Section 4(2) of the Securities Act of 1933, as amended.

These purchased shares will distribute to the shareholders of our company on one to one basis that is every outstanding share of USChina Channel will get one share distribution of China Bull Management Inc as a special dividend, or gift from the Company